Agents

Agent Danielle Smith’s Former Clients Speak Out

25 August 2018

From Publishers Weekly:

The children’s book publishing world has been roiling for the past week over the disclosure that Danielle Smith, the principal of Lupine Grove Creative, an agency specializing in children’s and YA authors, acted more like a literary grifter than a literary agent. Since Smith emailed a letter to her clients on July 24, confessing that recently she had “not handled a situation as well as I should have” and thus was dissolving the agency effective immediately, 19 former clients have reached out to PW, sharing tales of a pattern of malfeasance that has shaken their confidence and adversely affected their careers.

According to some former clients, she claimed to have had offers in hand that didn’t exist, such as, one author requesting anonymity disclosed, a $50,000 two-book deal. She informed others that editors had expressed interest in their submissions, but subsequently told them that either the editors had then lost interest or had outright rejected those submissions. Clients also complained about Smith’s refusal to communicate with them honestly and in a timely fashion, as well as the lack of transparency, including a reluctance to render submission lists to them upon request. Several clients allege that she even forged emails from editors and passed this correspondence along to them.

“Since this began, I and others have kept asking why, and looking for some rational explanation,” a well-known author who is knowledgeable about the situation told PW. “As more and more levels of deception are uncovered, you think, wouldn’t it have been easier to just to do the work? And of course it would have been. And the more you learn, the more all rational explanations fall away. So then I’m left wondering if the deception itself wasn’t the end game. Just the sheer thrill of getting away with it.”

The negative experiences with Smith, according to these sources, go as far back as five years, when Smith was a newly minted agent at Foreword Literary. She moved to Red Fox Literary in 2014. Smith, who was named a PW Star Watch Honoree in 2016, launched Lupine Grove in Shell Beach (San Luis Obispo County), Calif., in January 2017. Agent Jennie Kendrick joined Smith at Lupine Grove this past January.

After complaints about her surfaced on social media in the wake of that letter, Smith shut down the Lupine Grove website and deleted her social media accounts. PW has reached out to Smith for comment on the allegations, but has not received a response.

More than 60 writers whom Smith has represented at some point between 2013 and 2018 have joined a private Facebook group, where they are sharing information and commiserating with one another. While there is much speculation as to why Smith treated her clients the way she did, and the extent of the deceptions, nobody really has any answers—including Kendrick, who worked remotely from San Francisco. Kendrick says she was taken completely by surprise by Smith’s letter and has spent her time since “finding a new home for my clients.” She added, “As far as my working relationship with Danielle goes, it was professional and helpful, and she was always responsive to me and my clients, so this was just a shock all around.”

According to the former client who is referred to in Smith’s July 24 letter, who spoke with PW on condition of anonymity, Smith represented her for two years, until June. Almost a year ago, Smith claimed that she had scored at auction a lucrative two-book deal with a major house for this debut author of a middle-grade novel. “I never heard from the editor after [I] accepted the offer,” she said. “Danielle always had excuses. Eight months passed, and I saw a lawyer.”

Link to the rest at Publishers Weekly

No, you probably don’t have a book in you

28 July 2018

From The Outline:

Has anyone ever said you should write a book? Maybe extraordinary things have happened to you, and they say you should write a memoir. Or you have an extremely vivid imagination, and they say you should write a novel. Maybe your kids are endlessly entertained at bedtime, and they say you should write a children’s book. Perhaps you just know how everything should be and imagine your essay collection will set the world straight.

Everyone has a book in them, right?

I hate to break it to you but everyone does not, in fact, have a book in them.

. . . .

I am a literary agent. It is my full-time job to find new books and help them get published. When people talk about “having a book in them,” or when people tell others they should write a book (which is basically my nightmare), what they really mean is I bet someone, but probably not me because I already heard it, would pay money to hear this story. When people say “you should write a book,” they aren’t thinking of a physical thing, with a cover, that a human person edited, copyedited, designed, marketed, sold, shipped, and stocked on a shelf. Those well-meaning and supportive people rarely know how a story becomes printed words on a page. Here’s what they don’t know, and what most beginner writers might not realize, either.

Every story is not a book.

. . . .

A book may also be things that happened or that we wished happened, embellished for interest, but it’s also so much more. It’s a story told artfully on the page, tailored to the reader. A book has a beginning, middle, and an end that keeps the reader invested for the five, six, ten hours it can take to read a book, because if it gets boring in the middle, most people stop reading. A book, when published by a traditional publisher to be sold in stores, has a defined market, a reader in mind, and that reader is one who usually buys books, not just some hypothetical person the publisher hopes to catch off the street.

You can tell a story to anyone who’s willing to listen. But writing a book that people will pay money for or take a trip to the library to read, requires an awareness few storytellers have. It is not performance, not a one-person show. It’s a relationship with the reader, who’s often got one foot out the door.

. . . .

Remember writing papers in school? Remember trying to eke out 1,000 words or three pages or whatever seemingly arbitrary number a teacher set? Remember making the font bigger and the margins wider? You can’t do that to a book. I ‘m often sent stories that are way too long or too short for the publishing industry, and that makes them bad candidates for books. The average novel, for adults or children, is at least 50,000 words. That’s 50 three-page papers. Shorter books are not cheaper for the publisher to make, for many reasons too boring to get into here, and no, it’s not just cheaper to do ebooks, either. (No, really, it’s not.) If you’re an epic writer and think breaking up your 500,000-word fantasy series into five books is the key, you’re wrong there, too. A publisher doesn’t really want book two until they see how book number one is selling. And if your story doesn’t wrap up until book five, then you’re going to have nothing but disappointed readers. Writing — just getting the words on the page — is hard, period. Writing artfully so that someone enjoys what you’re writing is even harder.

Publishing is a retail industry, not a meritocracy.

Writing is an art form, books are art, but they exist in a system that relies on readers to exchange money for goods. That money pays a publisher’s rent and electric bill, and the salaries of the often hundreds if not thousands of people they employ to make the books readers buy. And if a book doesn’t make money, it’s very hard to pay those salaries. Publishers take a financial risk on a book, because no one knows how a book is going to sell until it’s on shelves, and very successful authors (your JK Rowlings and James Pattersons) help pay the bills for the less successful books. Publishers certainly publish books they know are not going to make a lot (or any) money, and they do this for the sake of art or history or prestige, or a dozen other reasons. But they can’t do it that often. So, you may have an amazing story, but if there isn’t sufficient evidence that readers will flock to it, you’re not likely to be published. No one deserves to be published just because they completed a book. It’s not “if you write it, they will come.”

Link to the rest at The Outline

Or you could write a book, click on the KDP Publish button and let JK and James pay all those salaries and bills on their own.

And never have to deal with a literary agent. Or pay anyone but yourself.

I Am Not a Gatekeeper

1 July 2018

From literary agent Rachelle Gardner:

People in and around this business have long used the word “gatekeeper” when referring to those in publishing tasked with choosing which books to publish or represent.

Since the rise of self-publishing, it has become a debate—often heated:

Down with the gatekeepers!

Hooray for the gatekeepers!

BUT GATEKEEPERS ARE NOT WHAT YOU THINK.

There is nobody in publishing whose job is to “keep you out.” Are we watching the gate? Yes!—to identify authors we’d like to see published.

Each person who has a so-called “gatekeeping” role is tasked with finding authors to bring in, not authors to keep out. Anyone who acquires authors for an agency or for a publisher is totally 100% focused on bringing in books they believe they can sell.

That’s IT.

You wouldn’t call the women’s wear buyer at Nordstrom a gatekeeper, because you know her job is to bring in clothes she believes her customers will like. Her job is not to keep out the bad, but to bring in the good.

Some publishers, librarians, agents, and acquisitions editors call themselves gatekeepers. Maybe they relish that role because they feel it gives them power. But regardless of what they say or how they refer to themselves, they’re not gatekeepers. They’re selectors. Choosers. They’re salespeople. They’re looking for books they can sell. Period.

Link to the rest at Rachelle Gardner

PG checked the almost-always helpful Wikipedia for definitions:

A gatekeeper is a person who controls access to something, for example via a city gate. In the late 20th century the term came into metaphorical use, referring to individuals who decide whether a given message will be distributed by a mass medium.

. . . .

Gatekeepers serve in various roles including academic admissions, financial advising, and news editing. An academic admissions officer might review students’ qualifications based on criteria like test scores, race, social class, grades, family connections, and even athletic ability. Where this internal gatekeeping role is unwanted, open admissions can externalize it.

Various gatekeeping organizations administer professional certifications to protect clients from fraud and unqualified advice, for example for financial advisers.

A news editor selects stories for publication based on his or her organization’s specific criteria, e.g., importance and relevance to their readership. For example, a presidential resignation would be on the front page of a newspaper but likely not a celebrity break-up (unless the paper was of the gossip variety).

Other people gatekeeping roles are in mental health service, clergy, police, hairdressers, and bartenders because of their extensive contact with the public.

And a quick quote about gatekeepers:

I sat with myself one day and asked, ‘Who is in those prestigious literary circles? Do they represent me? Do they appreciate the topics I write about and the style in which I write? Do those gatekeepers let a demographic like mine through the door?’ And the answer was no.

Rupi Kaur

PG will note that a gatekeeper’s continued existence requires that a lot of people want what is behind the gate.

Learned Helplessness

14 June 2018

From Kristine Kathryn Rusch:

I was in the middle of a long blog post about writers licensing the rights to their work when the news broke about Donadio & Olson embezzling from their clients. I stopped what I was working on and wrote a different post, because I finally had public proof of something I’d been saying for years: that important, well-known literary agents mismanage and/or embezzle the monies they receive for their clients. This has gone on for decades. It’s not something new.

. . . .

Then another reader wrote an answer post, taking me to task about telling writers not to hire agents.

He’s argued, calmly and politely, with my advice on agents before, so that wasn’t new. We disagree. He has his reasons for keeping an agent. I think those reasons are mired in the 20th century. But that’s his choice. He seems to be making an informed decision, and is taking a calculated risk. I don’t agree with the risk, but it’s his career, not mine. (I do hope he audits his agent regularly. He monitors the payments he knows are coming, but there’s no way to monitor the surprise payments.)

Then…weirdly…I started getting emails, direct messages, and notifications (from friends) of tweets taking me to task for advising that writers not have agents. I was called names. Well-known writers who have never met me wrote that I always give bad advice and that it figures because I’m …pick your hated POV here. (According to the posts, tweets, and emails {depending on who is upset with me}, I’m either bigoted or too PC. I’m against all women or too feminist. I’m always on the wrong side of every issue, and I lie, lie, lie.)

. . . .

Because you can’t fight myths with logic. Even when the myth forces the people spouting those myths to act against their own (and their friends’) interest.

In addition to the tweet-storm, I got some fascinating emails. I can’t share some of them—especially the ones from long-time IP attorneys who told me about the fraud and embezzlement at big name agencies. One IP attorney reminded me of the Harper Lee mess with McIntosh & Otis.  Ironically, according to Vanity Fair,

The agency, known as M&O, was created by Otis and her friend Mavis McIntosh, who had both reportedly left another agency in the mid-1920s after they discovered it to be highly suspect in its practices.

As I said, this crap has gone on for a very, very long time.

I got a lot of sad emails from writers who lost money to fraud, lost major book deals to ineptitude, and have given up on their careers because of agent malfeasance.

. . . .

[A] New York Times bestseller posted on my personal Facebook page that she was surprised people were talking about this issue at all (she was defending the people who were defending agents—although she hadn’t seen the truly vituperative stuff), because no one talks about agents in her experience.

Her comment was followed by a new writer who worried that he couldn’t sell to traditional publishing without an agent. To date, I’ve gotten six public comments, five personal emails and three messages on Facebook just like that, asking the same thing.

I got to noodling all of this in my head—more proof, more stories, lots of us who say we do better without agents, that we can handle our own businesses, and then I went to lunch with a new friend who has worked in the arts for sixty years. She handles her own business affairs, still.

. . . .

Artists are supposed to be feather-brained. Artists are supposed to be bad at business. Artists who are good at business are anomalies or worse. Artists who are good at business are only in it for the money. Artists who are good at business don’t understand art.

Of course, the people who are defining what that art is are mostly professors, who were unable to succeed at the business side of the art, so they have to keep their day jobs.

Some of those professors are writers with big book deals and agents.

As I was noodling all of this, though, what bothered me the most were two things in combination: that comment from the New York Times bestseller about silence and the variety of plaintive messages from beginners who are still pursuing their dreams of being the kind of writer they grew up admiring. But how do you get to one of the big five publishers without an agent?  one of those writers wrote on Twitter this morning.

Well, that assumes that a savvy writer wants a contract with one of the big five. The fact that this guy wrote the question this way proves he’s not savvy. I wouldn’t let anyone go into that shark-fest without a lot of education, the ability to negotiate, and a tough-as-nails IP attorney on their side. And even then, I would hope the writer has a good reason for going traditional, because the best negotiator in the world won’t be able to get the kind of deal that we used to get as a matter of course in the 1980s.

It was the comment though about silence that really got me. Because the New York Times bestseller was right: writers rarely discuss the problems with their agents. Writers only brag about their agent’s successes.

The writers who have been screwed by their agents are either too embarrassed to write a blog post like Chuck Palahnuik’s or those writers have signed a non-disclosure agreement as part of a settlement with that agent. Only a few of us refused to sign NDAs, refused the settlements. And when we talk about what happened to us, we’re called crazy, delusional, and outliers. When we say we handle our own business affairs, we get dismissed because we’re successful so it’s easy for us. We are lucky. Or famous. Or have connections no one else does.

. . . .

Every person in the world who starts a small business—and that’s what writing is…it’s a small business—learns how to conduct the business part of the operation. If the small business owner doesn’t learn that, then they go out of business really fast.

Artists have safety nets that most small business owners don’t have. A professorship based on a few published books and stories (as well as an expensive PhD). Or an ability to get grants. Or an employed and tolerant spouse.

The myth is that artists can’t make money. And before I confuse some of you further, I’m going to stop using the term artist (for dancers, painters, musicians, writers), and hone down to writers alone. But this applies to all of the creative arts. Artists have safety nets.

You’ve all heard that writers can’t make money, so why even try? You’re writing for the love. You’re writing to create something lasting. You’re writing to become famous or well-reviewed or accepted in your own literary circle.

You’re not writing to make money.

Only fools and hacks write for the money. The more someone publishes, the worse their skill must be. The more financial success they have, the more their writing abilities go downhill as they “sell out.”

That’s counterintuitive to the way that humans operate. The more humans practice something, the more they refine their techniques, the closer those people get to the top of their game. Their game might not be as good as someone else’s, but writers—like everyone else—improve with practice.

. . . .

This myth that writers can’t make money plays right into the hands of embezzlers and con artists. Think about it: I’ll handle your negotiations, your paperwork, your money, so you don’t have to bother your pretty little head about it.

Money gets pocketed, writers need those teaching jobs, and the leech who made the offer benefits from the myth. The writer sure doesn’t.

And then there’s the silence.

Silence is the hallmark of abuse.

Link to the rest at Kristine Kathryn Rusch and thanks to Colleen for the tip.

Here’s a link to Kris Rusch’s books. If you like the thoughts Kris shares, you can show your appreciation by checking out her books.

As usual, Kris gets to the heart of the matter in a way very few others do.

PG can’t go into any details because of client confidentiality issues, but today he finished reviewing an agency agreement from a large literary agency for a client.

It required more time than it has in the past. Not because the agreement was longer or more complex than the many others PG has reviewed.

It was the CYA paragraphs.

When lawyers are asked to review a contract, in addition to other subjects, clients want to understand what can go wrong if they enter into the contract, what their downsides might be if the whole thing goes south. It took PG a while to work his way through the potential downsides for the client’s proposed agency agreement.

This lead him to think more about the agency and publishing business and why some common practices that would be considered illegal and immoral in other settings are “the way things are done” in publishing.

PG’s Rule #1 for contracts is, “Don’t do business with crooks.”

A client could hire a whole herd (flock? colony? troop?) of lawyers to prepare the finest contract known to humankind. If the counterparty is a crook, the likelihood of the finest contract working out well for the client is still not good.

Crooks gonna crook.

PG just trafficked in a stereotype about crooks.

As a general proposition, while making one’s way through life, it’s not a good idea to deal in stereotypes. Every large group of people includes some that may fit a stereotype commonly associated with the group and others who are much different than the stereotype. In an effort to avoid wrongly stigmatizing those who differ from the group, society rightly takes a somewhat dim view of many varieties of stereotypes.

However, stereotypes can be quite useful and are utilized by most people in one form or another on a regular basis.

Who would you trust more, a drug dealer or an elementary school teacher?

There you go, stereotyping drug dealers.

Long ago, PG learned to be more careful about relying on the statements of a prospective client who was in prison than a prospective client who walked into his law office off the street. Are innocent people sometimes incarcerated? Absolutely. Are most people in prison innocent of a crime? Not really. Are most people really, really, really anxious to get out of prison and willing to do almost anything to achieve their goal? Pretty much.

Do common business standards and practices vary from occupation to occupation? Is an auctioneer expected to be more or less reliable when talking about the value of a piano being sold than a professional appraiser? Is there an unwritten code of conduct for auctioneers that affects their view of appropriate behavior when trying to sell something?

This is a long-winded introduction to PG’s concerns about agents and traditional publishers.

From a purely economic standpoint, an agent needs a good relationship with a handful of acquiring editors working at a small group of publisher much more than an agent needs a good relationship with an author who is mid-list or below in the publishing hierarchy.

Publishers who will pay a $100,000 advance for a science fiction novel are far rarer than science fiction authors are. This and other economic realities strongly influence the behavior of agents.

Looking at what’s really happening in an agent’s life, it would make more economic sense for the agent to work for and receive a commission from a publisher for locating a salable author than to pretend the agent works for the author and puts her interests first before the publisher’s.

This brings PG to customs of the trade.

Many years ago, PG learned about customs of the New York City garment industry while representing a client who manufactured and sold boatloads of inexpensive jackets. Some of the customs of the trade in the garment business were identical or similar to standard commercial law and others were much different. Those who regularly did business in the garment industry were far more concerned with applying the customs of the trade instead of anything the state legislature had ever written.

In this respect, the customs of the trade in New York City bore some resemblance to what was sometimes called “The Law of the Hills” in the Ozark Mountains of Southern Missouri and Northern Arkansas.

In some cases, juries were more influenced by the Law of the Hills than they were by The Revised Statutes of Missouri or anything the judge might say about the case. While the state law might look askance at a husband beating up his wife’s lover, the Law of the Hills permitted such actions as long as nobody was permanently crippled.

PG posits that the customs of the traditional publishing trade, including the customs of the literary agency trade have created an environment in which an agent can do far worse things than fail to forward payment the agent receives for royalties from Russian sales to an author. The author’s never going to know and such an action won’t harm the agent’s reputation with HarperCollins even if someone at HarperCollins finds out about it.

When faced with a choice between promptly paying every penny of royalties due to an author and keeping the doors of the agency open, the customs of the agency trade dictate that the survival of the agency is paramount. An agent will make the same decision once, twice, three times — as many times as it takes to survive.

Thus, an otherwise honest and honorable group of people can be lead down a path that ends in systematic and large criminal diversion of funds away from authors and into agents’ pockets. PG’s gut tells him that this has happened at a great many agencies, both small and large.

It’s a custom of the trade.

An iconic literary agency is fleeced by its accountant

13 June 2018

From Melville House:

Usually, when sums of cash north of one million dollars are invoked on this blog, it is because a celebrity has just received a mega-advance to write a book, or because Amazon has avoided paying that much in taxes.

Today is different, though. We’ve got a real caper on our hands.

The New York-based literary agency Donadio & Olson represents some huge talent — such as Chuck Palahniuk.  Last fall, one of the agency’s clients was expecting a $200,000 advance payment that never arrived. The author tried to contact agency accountant Darin Webb, but still didn’t receive the check for months.

That’s because Webb had processed that payment, and many others like it, as a payment to himself. Crazier still, he’d been running this skim-scam since 2011.

. . . .

The agency now has a forensic accountant investigating nearly twenty years of financial records to determine the full extent of the theft, and to begin re-paying the authors unfortunately caught up in the con.

A lawyer for D&O has stated, “The agency’s singular focus at this time is ensuring that all of its impacted clients are made whole to the greatest extent possible, and the agency is cooperating in every possible way with the government’s efforts.”

Link to the rest at Melville House

PG realizes there is not much new information in the OP that hasn’t been included on prior posts on TPV.

However, he wants to provide as much information as possible about this matter because it should be thoroughly understood by authors.

The quote from the attorney for Donadio & Olson, “The agency’s singular focus at this time is ensuring that all of its impacted clients are made whole to the greatest extent possible,” is structured in a telling way.

“The agency’s singular focus”, “ensuring that all of its impacted clients”, “are made whole”, all sounds very reassuring for authors who have lost money for years.

Unfortunately, these statements are limited by, “the greatest extent possible”.

PG suspects the agency cupboard is bare or almost bare. One of the many questions that immediately come to mind is whether the agency principals received any of the embezzled funds. Were they victims or co-conspirators?

Either answer to that question should ruin the reputation of the agency principals. If they were victims, even preliminary evidence points to a conclusion that these people do not know how to properly operate a literary agency and carry the responsibility for safeguarding money that belongs to other people.

Did none of the agency’s clients contact the principals about low royalty payments over the many years of embezzlement? After presumably multiple queries by multiple authors did the agency principals ever question their accountant? Or have an outside accounting firm come in to look over the books?

If they are co-conspirators, then criminal punishment would seem very likely.

The press release announcing embezzlement charges against Donadio & Olson’s accountant from the US Attorney for the Southern District of New York does not mention the name of the agency, referring only to “a Manhattan-based literary agency”, “the Agency”, or “a firm in the book business”. PG doesn’t know whether this is part of a strategy by the US Attorney or the result of the persuasive abilities of Donadio & Olson’s lawyers.

While PG has visited New York on many occasions, mostly for business purposes, he is definitely not an expert on the city or state. However, his impression is that the New York state legislature is quite active in passing laws on a wide variety of subjects.

Presumably, it is of some financial and social benefit for the city and state of New York to be the headquarters of the traditional publishing industry in the United States.

While he is certain members of New York’s political class do not pay any attention to him, PG proposes some legislation to maintain the reputation and status of the publishing biz. The principal elements of the proposed legislation follow.

  1. No one may act as a literary agent in the State of New York without being properly licensed as such by the State of New York.
    1. The State may establish minimum qualifications for persons seeking to be licensed as literary agents, including the requirement that a prospective agent take and pass an examination covering an agent’s duties and obligations under New York law.
    2. A person located outside of the State of New York will be deemed to be acting as a literary agent within the State and be subject to the State’s regulations respecting literary agents if such person is representing authors in the negotiation of publishing or licensing agreements with any company whose primary business is located within the State and has successfully concluded more than one such negotiation on behalf of an author during a given calendar year.
  2. A literary agent is obligated in his/her fiduciary capacity to safeguard the funds of each client represented.
    1. Failure to do so may result in revocation of the agent’s license and/or additional penalties.
    2. An agent may be held personally liable for damages resulting from a breach of the agent’s fiduciary obligations to an author.
    3. Each agent working in a literary agency has an obligation to promptly report any improprieties of which he/she becomes aware involving the safeguarding of client funds to appropriate state authorities.
  3. Each literary agent must maintain a separate trust account with a New York bank or similar financial institution for the purpose of depositing and disbursing all client funds.
    1. All client funds must be deposited into the trust account as soon as possible after their receipt.
    2. All payments from the trust account must be paid to the agency’s clients within 15 days of receipt by the agency.
    3. On at least an annual basis, an agent will provide each client with a full and complete written accounting of trust account activity involving the client’s funds.
    4. Commingling client funds with agency funds is prohibited.
    5. On at least an annual basis, each agent will retain an independent outside accountant to conduct an audit of the agency’s trust accounts and provide a written report of his/her/its findings. Any client may request and shall promptly receive a copy of the accountant’s report for any year during which the agent was representing the client.
    6. The State of New York may audit an agency’s trust account for purposes of ensuring compliance with the law at any time.
    7. The agency’s trust account obligations shall not apply to any funds paid directly to its clients by publishers or other third parties with which the client/author has a written contract.
  4. The Attorney General of the State of New York is authorized to receive compaints from any person respecting a violation or potential violation of these laws by an agent or literary agency. Within 90 days of receipt of such a complaint, the Attorney General shall make the contents of the complaint available online to the public.

PG welcomes any additions, changes, etc., to his proposed Literary Agent Licensure Code.

He notes that, as a general proposition, he does not support widespread occupational licensure requirements (hair braiding, etc.), but, given his experience with authors and agents generally and the latest from Donadio & Olson, he thinks the time for licensing agents or imposing some type of effective regulation on their actions and practices has arrived.

An Agent Nightmare Revealed

6 June 2018

Some thoughts from Kris Rusch on the literary agency bookkeeper who is charged with embezzling $3.4 million from the authors represented by the agency. PG first mentioned it here.

From Kristine Kathryn Rusch:

The news broke publicly over the holiday weekend. If you blinked, you missed it.

The bookkeeper for a prestigious New York literary agency pled guilty to embezzling millions from the agency, leaving the agency “on the brink of bankruptcy.”

Donadio & Olson has existed for 49 years. Started by legendary agent Candida Donadio, the agency has represented some of the biggest names in fiction for decades.

. . . .

The actual criminal charges against the bookkeeper, Darin Webb, were filed on May 15 in federal court. Webb was charged with wire fraud for embezzling $3.4 million. A forensic audit is now occurring at Donadio & Olson, and there is speculation that the amount of money Webb stole will go much, much, much higher.

Here are the facts of the case as reported in the press. $200,000 that an unnamed writer represented by Donadio & Olson expected last year never arrived. The writer kept contacting Webb, who lied about what was going on with the money. Finally, fed up with the delay, the writer contacted someone else at Donadio & Olson. (That person isn’t named either.)

. . . .

The panic is clear in the calm language of Donadio & Olson’s attorney on the civil case. He said, the agency is focused on “ensuring that all of its impacted clients are made whole to the greatest extent possible.”

To the greatest extent possible.

. . . .

Even if the agency is insured against this kind of disaster, it would take years for the insurance to pay out, because the court cases have to go through first. And really, there are other questions here that an insurance company would want answered.

How much of this problem inside Donadio & Olson was caused by negligence on the part of the agency? Webb apparently worked alone, with no back-up. He handled the finances for the agency, received the money and the paperwork from publishers/movie studios/game companies, and then (in theory) passed that money onto the clients, retaining Donadio & Olson’s 15% commission. Did Donadio & Olson require this bookkeeper, who was hired at the tender age of 28, to be bonded? What level of degree did he have? Was this his first job?

How come no one backed him up? Did Donadio & Olson hire a CPA to review their books every year? Did Webb fudge those books before they went to the CPA?

How much of this could have been prevented with average due diligence, the kind of stuff you expect someone who has a fiduciary responsibility to clients to have?

All of those questions and more need to be answered before any insurance settlement would be considered, let alone paid.

To the greatest extent possible.

In other words, my friends, Donadio & Olson does not have the financial resources to make up for a theft of $3.4 million, let alone any more potential losses that the forensic accountant might turn up.

. . . .

[I]magine what’s going on with estates like [the estate of the author of The Godfather, Mario] Puzo’s, which includes all of the monies still coming in from the movies, from licensing, from the books (which are still in print). These are multimillion dollar ventures, handled every year by Donadio & Olson, with no one overseeing the day to day running of the finances.

Oh, my. The money was simply there for the taking.

The thing is, Donadio & Olson is a “reputable” agency. The New York Post used the word “prestigious” in describing the agency. Donadio & Olson was, until last week, a gold-standard agency, one that most young writers might have aspired to have as representatives.

. . . .

According to The Post, Webb confessed to “company executives and their attorneys” in March. A videotaped confession, mind you. Donadio & Olson was still blogging about writing and such on its site in April, acting as if nothing was wrong.

And then…and then…

Well, here’s The Post:

Some writers represented by the agency told The Post they had not been contacted about the theft, and did not know if it affected their royalties.

“This is the first I heard of it,” said McKay Jenkins, a nonfiction author.

Bert Fields, a lawyer representing the Puzo estate, said he learned of the arrest from The Post.

In other words, Donadio & Olson has not informed its clients—to whom it has a fiduciary responsibility—that their one and only bookkeeper confessed to massive embezzlement. The agency has known about this since last fall.

Sadly, I am not surprised by any of this. As I have blogged about before, literary agencies are not regulated. Prestigious agencies embezzle. I’ve personally had one of the biggest boutique agencies in the world embezzle from me. (And I suspect they still are, although I can’t prove it. But there are licensed properties—tie-ins—that I wrote whose royalty statements I cannot get my hands on because no one at the licensor will cooperate with me. The books have been in print for 25-30 years and I have never seen a dime in royalties. Ever.) I’ve also had one of the biggest fraudsters in the industry steal from me. I speak from hard-earned life lessons here.

. . . .

I understand how someone could notice the missing $200,000 payment that they knew was coming. But what about the subsidiary rights sales that no one bothered to tell them about? The royalties on already sold foreign books? The licensing payments from movie-related merchandise? The reprint fees?

I keep imagining those Donadio & Olson writers who have big book deals still working a day job because “there’s no money in writing.” There’s no money in writing when your agent is stealing it from you, that’s for damn sure. In fact, if you want to read a very sad illustration of what happens when an agent embezzles from a big name writer who only has a few properties (not hundreds like, say, Nora Roberts), read this about Chuck Palahniuk from The Guardian.

. . . .

If writers have literary agents—and no writer should—but if a writer for some reason feels they need an agent, then that writer needs to make sure the publisher/game company/film company splits payments. The company pays the writer her 85% and the agent his 15% directly. No money ever ever ever goes through the agent’s hand, except the money he earned.

Better yet to pay 100% to the author, and have the author pay the agent the 15%, just like you’d pay the housekeeper. But agents complain about that. Seems agents think the writers won’t pay them in a timely fashion.

Link to the rest at Kristine Kathryn Rusch

Here’s a link to Kris Rusch’s books

PG has done a little online research.

  • Here is the website of Donadio & Olson. PG couldn’t see any indication of the tiniest cloud on the horizon when he checked the site.
  • Here’s a Tweet on the first page of the agency’s website:

 @DonadioandOlson 

Who’s excited to pick up a copy of @chuckpalahniuk new book?! It’s already made it to number seven on the @nytimes bestseller’s list! pic.twitter.com/Q1eEtQNDOP
#7 on the NYT bestseller list and Palahniuk is not receiving any royalties.

The Guardian article which Kris mentions in the OP quotes Chuck Palahniuk saying he’s “close to broke” because his  royalties have evaporated.

The agency website lists two agents:

Neil Olson has been with the agency since 1987 and became a partner in 1996.  He represents most of the agency’s estates, as well as mainstream literary and commercial fiction, and nonfiction in the areas of history, biography, science, travel, and nature.  His clients have won the National Book Award, the Edgar Allen Poe Award, and the William Dean Howells Medal, among other prizes.  Neil can be reached at neil@donadio.com.

Edward Hibbert began working at the agency in 1989.  His clients include bestseller Chuck Palahniuk, Christopher Bram, and the biographers Ed Sikov and Brian Kellow.  Additionally, he sold the film rights on such titles as the cult classic Fight Club, Choke, Oscar Wilde(based on the Richard Ellmann biography) and Gods and Monsters, winner of the Academy Award for Best Adapted Screenplay.  He represents literary and commercial fiction, and non-fiction in the area of biography and the performing arts. Edward can be reached at edward@donadio.com.

This has apparently not been a large agency, at least in the  last few years. PG checked the agency website via the Wayback Machine on some random dates from about 2012 on forward and the largest number of  agents listed were four. Most of  the time, there were three agents – the two listed above plus Carrie Howland.

PG mentions the small number  of agents because he would suspect that the scale of embezzlement listed in the OP would be less likely to be noticed in a larger agency with a couple dozen agents and several hundred authors.

If there were two agents and Chuck Palahniuk phoned one of them to ask about his royalties, PG would think that agent might ask to  see some recent royalty reports from the client’s publishers.

At least one and likely both agents would seem likely to have a reasonable idea about how  much income the agency was  generating and, almost certainly, how much money the agent took home each year. But perhaps there were more important concerns than whether the  agency was paying its authors in full and on time.

Accountant embezzled $3.4M from famed literary agency

30 May 2018

From The New York Post:

A Manhattan accountant cooked the books at a prestigious literary agency that represents top writers, including “Fight Club” author Chuck Palahniuk, bilking its clients of millions and leaving the company on the brink of bankruptcy, according to legal papers.

Darin Webb, 47, faces 20 years in jail on wire-fraud charges for embezzling $3.4 million from storied Manhattan agency Donadio & Olson, according to a recently unsealed federal criminal complaint.

Although the agency, which also represents the estates of “Godfather” writer Mario Puzo and radio legend Studs Terkel, was not named in court papers, a lawyer representing the firm confirmed to The Post that Donadio & Olson was the subject of the alleged theft.

. . . .

The stolen money — allegedly lifted between January 2011 and March of this year — was earmarked for author royalties and advances, the complaint says.

But the theft could be exponentially more, a source told The Post, noting that a forensic accountant is combing through Donadio & Olson’s books all the way back to 2001, Webb’s first year at the agency.

He allegedly fessed up to the theft in March in a videotaped interview with company executives and their attorneys at the agency’s Chelsea office, saying he filed monthly financial reports that “contained false and fraudulent representations in order to accomplish the theft and evade detection,” the complaint states.

. . . .

The alleged theft was first discovered last fall when an unidentified author who was expecting to receive a $200,000 advance from his publisher asked Webb why he had not received the payment.

According to the complaint, Webb put the author off for months.

“The author did not receive the payment because Webb had converted the funds to Webb’s own use,” says the complaint.

Link to the rest at The New York Post

For those who are new visitors to TPV, PG will repeat his previous observations about literary agencies – The agency adds no value for an author by receiving all or any portion of the royalties to which the author is entitled from the publisher.

The solution is split checks – the publisher sends 85% of the royalties directly to the author and 15% to the agency together with a royalties report to each.

Unfortunately, this is not the first time an agent or an employee of an agent has stolen money that should have been paid to the agency’s clients.

According to the OP, this alleged embezzlement has been going on for about 17 years.

What does this say about the agent’s financial management skills? Does the agency ever pay attention to its authors’ money? Does the agency have even the most rudimentary accounting systems and safeguards in place to protect authors? Does the agency care?

The Guardian has a story about Fight Club author Chuck Palahniuk who says that he is “close to broke” because of the embezzlement.

When to follow up with a literary agent

30 April 2018

From former literary agent Nathan Bransford:

Contrary to popular belief among some fearful authors, literary agents will not be scared off and disappear into an angry puff of smoke the moment you send them a follow-up email.

An agent’s inbox looks like the electronic equivalent of Niagara Falls, and at any given time they will have literally thousands of pages in their to-be-read pile.

As a result, most agents will appreciate a timely and extremely polite nudge. (And if they would get annoyed by one, would you really want to work with them anyway?)

But when do you follow up with an agent and how often? In this post I’ll give you some guidelines on when and when not to follow up with an agent based on different stages in the publishing process.

Bear in mind that the below are just rules of thumb and different agents are always going to feel differently. And an individual agent’s stated preferences always wins for that agent.

. . . .

Unless otherwise specified by the agent, it’s not customary to follow up on query letters. Many agents have “no reply means no” policies and they will get annoyed pretty fast if you start chasing after a query that they didn’t reply to.

Yes, I know, it’s really scary to think your query got lost in the ether and was never seen by your dream agent, but that’s the way the e-cookie crumbles.

The only exception to this is if the agent specifically requested a query letter from you, as in a referral situation or where there’s some sort of a personal connection. In that case, I’d wait a few weeks and check again.

. . . .

If an agent requests a partial or full manuscript from you, they will expect you to follow up at some point if they haven’t gotten back to you in a timely fashion.

So how long do you wait? I’ve seen everything from a month to two and a half months recommended, but I personally would split the difference and follow-up once after six weeks and thereafter once a month until you get tired of following up.

. . . .

If you receive an offer of representation, it’s customary to then follow up with all of the agents who are currently considering your manuscript, whether a partial or a full. Give them a reasonable timeframe (7-14 days) to get back to you so you don’t leave the agent who offered you representation hanging.

Link to the rest at Nathan Bransford

PG has seen prior posts from Nathan (who is now an author) and he seems like an intelligent and pleasant individual.

While PG has no doubt that the recommendations in the OP accurately reflect the world of agents and their expectations, while he was reading them, he was reminded of the rules of court (not the legal types of courts, although they can also be a bit strange, but the rules of royal courts).

As illustrations, here are some Rules of Etiquette as followed at Versailles:

Those wanting to speak to the king were not to knock on his door. Instead, using the left little finger, they had to gently scratch on the door until they were granted the permission to enter the room. Many courtiers grew that fingernail longer than the others for that purpose.

Continuing the rules of court.

. . . .

During the 17th century, in France, manners became a political issue. King Louis XIV and his predecessors, in collecting together the nobility of France to live with the sovereign at Versailles, instituted a sort of school of manners. At the palace, the courtiers lived under the despotic surveillance of the king, and upon their good behavior, their deference, and their observance of etiquette their whole careers depended. If you displeased a Louis, he would simply “not see you” the following day; his gaze would pass over you as he surveyed the people before him. And not being “seen” by the king was tantamount to ceasing to count, at Versailles.

A whole timetable of ceremonies was followed, much of it revolving around the King’s own person. Intimacy with Louis meant power, and power was symbolically expressed in attending to certain of the king’s most private and physical needs: handing him his stockings to put on in the morning, being present as he used to chaise percée, rushing when the signal sounded to be present as he got ready for bed. It mattered desperately what closeness the king allowed you – whether he spoke to you, in front of whom, and for how long.

The point about Versailles was that there was no escape: the courtiers had to “make it” where they were. The stage was Louis’s, and the roles that could be played were designed by him. It was up to each courtier to fit him- or herself into one of the slots provided. The leaders of all the other towns and villages of France were made, largely through the use of etiquette, and more specifically through rudeness and judicious slighting by the tax-collecting intendants, to feel their subordination, the distance from the court.

. . . .

The French court imposed elaborate codes of etiquette on the aristocracy, among them the way to use a napkin, when to use it, and how far to unfold it in the lap. A French treatise dating from 1729 stated that “It is ungentlemanly to use a napkin for wiping the face or scraping the teeth, and a most vulgar error to wipe one’s nose with it.” And a rule of decorum from the same year laid out the protocol:

“The person of highest rank in the company should unfold his napkin first, all others waiting till he has done so before they unfold theirs. When all of those present are social equals, all unfold together, with no ceremony.”
Fashionable men of the time wore stiffly starched ruffled collars, a style protected while dining with a napkin tied around the neck. Hence the expression “to make ends meet.” When shirts with lace fronts came into vogue, napkins were tucked into the neck or buttonhole or were attached with a pin. In 1774, a French treatise declared, “the napkin covered the front of the body down to the knees, starting from below the collar and not tucked into said collar.”

Link to the rest at Etiquipedia

PG (sort of) remembers a saying to the effect that officials with the least power require the most punctilious respect for their position.

What is the position of a literary agent in 2018? Will that position change by 2028?

Traditionally, agents provided a valuable service for publishers. They strained away the worst of manuscripts thereby saving the employees of publishers untold hours of work wading through large stacks of paper to find the occasional pearl.

And, even better, agents were paid for their services by authors, not publishers.

An agent’s life is easier if all manuscripts must pass through his/her hands.

Let’s assume, for discussion purposes, that one in one thousand random manuscripts that a literary agency receives will interest a publisher. Expanding the pool of manuscripts should be good news for the agent. 5,000 manuscripts equals 5 published books, 10,000 manuscripts equals 10 published books, etc.

Yes, there’s more work involved if more manuscripts come into an agency, but a skilled agent (or a less-skilled intern) can usually discern within a few paragraphs that the author has not submitted a commercially viable manuscript. Dealing with a large number of incoming manuscripts is generally more efficient if the losers are rapidly culled. If an agent finds one reason to reject a manuscript she/he should probably not continue reading to discover whether there may be other reasons to reject the manuscript. Better to start on a fresh manuscript that may not include a reason to reject.

However, if a disturbance in the Force reduces the number of manuscripts coming in the door, that’s bad news for the agent. If one in one thousand manuscripts is going to be published and the monthly flow drops from 1,000 to 500, the agent’s income is cut in half.

Since not all manuscripts are created equal, even worse news arrives if the creators of publishable manuscripts begin to do something else with their manuscripts instead of submitting them to agents. If the ratio of publishable to received manuscripts changes from one in 1,000 to one in 2,000, the agent’s income is again cut in half.

PG is over-simplifying the situation, but the bottom line for agents is that every successful indie author represents a loss of potential income for agents as a group and one agency in particular. And it’s likely not just a loss of a single book. While some successful indie authors do go into traditional publishing exclusively or on a hybrid basis, most don’t, so an indie author with the talent to support a successful career takes many books out of an agent’s pile of money-makers.

PG suspects that documents like the OP will seem very strange to authors in future years.

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